Insolvency, Bankruptcy and Restructuring Practitioners

Insolvency Framework

cyprus new insolvency framework

The Insolvency Framework comprises of a package of six legislative texts which entered into force on the 7 May, 2015, the date of their publication in the Official Journal of the Republic (five laws and a set of regulations).

More specifically the following came into force:

  1. Insolvency of Physical Persons
    (Personal Repayment Schemes and Debt Relief Order) Law of 2015.
  2. Bankruptcy (Amending) Law of 2015, regarding personal bankruptcies
  3. Companies (Amending) Law (No.3) Law of 2015, regarding Company Liquidations.
  4. Companies (Amending) Law (No.2) Law of 2015, 
    regarding a mechanism for restructuring corporate debt (Examinership).
  5. Insolvency Practitioners Law of 2015.
  6. Insolvency Practitioners Regulations of 2015.

The first two laws are for natural persons whereas the third and fourth law is for companies. The fifth law and regulations regulate the profession of Insolvency Practitioners, which is pivotal for the successful application of the Insolvency Framework.

The six pieces of legislation have been put into force since the date of their publication in the Official Journal of the Republic, apart from Part I of the Insolvency of Natural Persons Law, regarding the Debt Relief Order. This part has come into force three months after the publication of the law, i.e. on the 7th August 2015.

Why Insolvency Framework

- The creation of appropriate incentives for repayment of debt, thus contributing to a substantial decrease of non-performing loans.

- The protection, where feasible, of the primary residence under strict eligibility criteria.

- The provision of a second chance for a fresh start of a bankrupt person so that he/she can be reintegrated in the economy and society.

- The introduction of a new mechanism to afford full and speedy relief to debtors, with little unsecured debt with no assets and no income, who cannot file for bankruptcy according to the current laws (due to the low amount of their debt).

- The provision of incentives for the rescue and rehabilitation of companies to afford viable companies the opportunity to reduce indebtedness and preserve jobs, while maximizing the value as a going concern for the benefit of creditors.

- The modernization of laws regarding the liquidation of companies and bankruptcy for natural persons, so that the liquidation procedure becomes speedier and more efficient.

For advice and information please contact

John P Poyiadjis,  

Roulla Katsounarou  

all Licensed Insolvency Practitioners.

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